Correlation Between Zhejiang Orient and Qiaoyin Environmental

Can any of the company-specific risk be diversified away by investing in both Zhejiang Orient and Qiaoyin Environmental at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zhejiang Orient and Qiaoyin Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhejiang Orient Gene and Qiaoyin Environmental Tech, you can compare the effects of market volatilities on Zhejiang Orient and Qiaoyin Environmental and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zhejiang Orient with a short position of Qiaoyin Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Orient and Qiaoyin Environmental.

Diversification Opportunities for Zhejiang Orient and Qiaoyin Environmental

0.05

Correlation Coefficient

Zhejiang Orient  Qiaoyin Environmental

Significant diversification

The 3 months correlation between Zhejiang and Qiaoyin is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Orient Gene and Qiaoyin Environmental Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qiaoyin Environmental and Zhejiang Orient is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zhejiang Orient Gene are associated (or correlated) with Qiaoyin Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qiaoyin Environmental has no effect on the direction of Zhejiang Orient i.e., Zhejiang Orient and Qiaoyin Environmental go up and down completely randomly.

Pair Corralation between Zhejiang Orient and Qiaoyin Environmental

Assuming the 90 days trading horizon Zhejiang Orient Gene is expected to under-perform the Qiaoyin Environmental. In addition to that, Zhejiang Orient is 1.04 times more volatile than Qiaoyin Environmental Tech. It trades about -0.15 of its total potential returns per unit of risk. Qiaoyin Environmental Tech is currently generating about 0.02 per unit of volatility. If you would invest  998.00  in Qiaoyin Environmental Tech on October 6, 2024 and sell it today you would earn a total of  10.00  from holding Qiaoyin Environmental Tech or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Zhejiang Orient Gene  vs.  Qiaoyin Environmental Tech

Zhejiang Orient Gene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhejiang Orient Gene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Qiaoyin Environmental

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Qiaoyin Environmental Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Qiaoyin Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhejiang Orient and Qiaoyin Environmental

The main advantage of trading using opposite Zhejiang Orient and Qiaoyin Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Orient position performs unexpectedly, Qiaoyin Environmental can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Qiaoyin Environmental will offset losses from the drop in Qiaoyin Environmental's long position.

The idea behind Zhejiang Orient Gene and Qiaoyin Environmental Tech pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.